Economic Outlook: Internet wars

Internet firms are up in arms this week over two bills that they say would force closure of legitimate Web sites without due process.

Companies such as Google and the online research site Wikipedia were taking steps to make their feelings known Wednesday by either partly shutting down or directing users to a Web page set up to explain their opposition to two bills, one in the House and one in the Senate, which are designed to thwart online piracy.

Wikipedia is making its point by closing down some pages, which will certainly cause a ripple of panic among casual researchers Wednesday, The New York Times reported.

Analysts are keeping an eye on two major issues. The first line of interest are the bills themselves. SOPA or the Stop Online Piracy Act is the bill introduced in the House, while PIPA or Protect IP Act is the Senate's version, IP standing for intellectual property.

The bills allow content owners, a film studio, for example, to petition a court to have search engines, such as Google, block access to black market Web sites, where pirated content is sold.

Powerful groups, such as the U.S. Chamber of Commerce, are in favor of the bill and are putting their lobbyists into action.

Technology companies that thrive on providing links, often advertising-generated links, to various Web sites, are opposed to the bills.

Perhaps to soften the perceived blow to businesses, proponents are frequently claiming that foreign firms are the primary targets of the legislation. But big Internet firms, like Google and Facebook, think in global terms. They can do business in India as quickly as they can in Ohio.

Interestingly, firms like Facebook would appear to have no direct interest one way or another. Facebook does not sell content. But Facebook has long stood for freedom of the Internet and is opposed to the new legislation.

These firms now say, as they frequently do, that the Internet should be policed by itself. That argument sounds more naive every day. Nevertheless, it's frequently the argument of choice.

Equally interesting at the moment is the point that SOPA and PIPA have become test cases for the power of Internet firms to sway public opinion.

IBM could shut down for a day to protest a bill making its way through Congress and few would really take much notice. If Wikipedia shuts down for a day, however, people will take notice.

Google's ability to re-frame an argument by directing consumers to a Web site of their choosing? That's different.

Wikipedia shutting down is akin to a power company imposing a blackout or a brownout to make a point. Google redirecting traffic to a Web site for political gains is like a phone company putting every consumer on hold, while it runs a tape with political message for 30 seconds. That's an entirely different ballgame.

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